Tariq Khdeir (L) is kissed by his mother in a mourners tent for his cousin Mohammed Abu Khudeir in the Arab neighbourhood of Shuafat in Jerusalem July 6, 2014.

An Israeli judge on Sunday released from jail and placed under house arrest a 15-year-old American of Palestinian descent whose apparent beating by Israeli police in East Jerusalem has drawn US concern.

Tariq Khdeir from Tampa, Florida, is a cousin of Mohammed Abu Khudeir, 16, whose abduction and killing in Jerusalem on Wednesday sparked violent protests and calls from Palestinians for a new uprising against Israel.

A video clip circulated on the Internet on Saturday showed two Israeli border policemen holding down and repeatedly pummelling a masked youth before carrying him away.

A later part of the video shows Khdeir's face with a heavy black eye and swollen lip.

Police spokesman Micky Rosenfeld said Khdeir was one of six protesters caught and detained on Thursday during clashes with police. Khdeir's mother told Reuters her son was watching the protest and had not taken part.

Khdeir, a high school student who had been visiting family in East Jerusalem, also denied being involved in the clashes, telling reporters in comments that aired on ABC News on Sunday that he "was just watching" the clashes.

He added he was "very angry" about the beating. "I'm speechless," he said.

Asked what he tell the Israeli police officers if he had a chance, Khdeir said: "I would say: 'Why would you attack me like that? At least try to tell me why would you do that to me if I didn't do anything to you.'"

A lawyer for Khdeir said the youngster would be restricted to a relative's home for nine days. His mother said the family was planning to return to the United States on July 16.

On Saturday, US State Department spokeswoman Jen Psaki confirmed that Khdeir was being held by Israeli authorities and said a consular officer had visited him. A judge on Friday had ordered him held in custody until a hearing on Sunday.

The State Department said on Sunday that Khdeir should be able to return to Florida with his family this month "if the investigation is concluded promptly."

"We are profoundly troubled by reports that he was severely beaten while in police custody and strongly condemn any excessive use of force," Psaki said in a statement.

Israel's Justice Ministry said the police internal affairs department had opened an investigation into allegations he had been beaten.

Many Palestinians, including President Mahmoud Abbas, say the slain teen, Abu Khudeir, was the victim of right-wing Jews avenging the abduction and killing of three Israeli teenagers, who disappeared while hitchhiking in the occupied West Bank on June 12, and whose bodies were found on Monday.

An Israeli security source said on Sunday that six Jewish suspects had been arrested in the investigation into Abu Khudeir's death have been arrested. The source did not identify them.

Israeli-Arab tensions have risen sharply after the killings. Israel launched a series of air strikes on Gaza early on Monday to quell Hamas rocket fire, and the Islamist group's armed wing said seven of its gunmen were killed.